Steve Forbes on Why Investors Lose Money

Most investors lose money because they pay too much attention to headlines, says Steve Forbes.

NEW YORK ( TheStreet) -- Steve Forbes talks to Debra Borchardt on why most investors should look inward when they lose money. A full transcript appears below.

Deborah Borchardt: Let's talk about the stock market. There's been a lot of controversy about high frequency trading. What is your opinion of that? Do you think it's something that needs to be regulated? Is that just a normal part of the market? Where do you lay out on that?

Steve Forbes: Well, when you get technology things happen at a higher speed. If you want to amuse yourself, read what some critic said about the invention of the telegraph in the 1840s when it was used for conveying stock quotes. They thought it was outrageous. So, it's not the speed. If there are abuses you deal with them in terms of if you're not treating your customers right. But what investors should keep in mind is the way to wealth is not how fast you do a trade and things like that. It's having the discipline not to let emotions be your enemy. All too often individuals underperform the market badly and even underperform equity mutual funds because they get in when times are good. They get out when times are bad so they get whipsawed.

A good example is in 2008 when the market took a sickening slide, a lot of people thought I've got to take some of the money off the table, what's left. I just can't stand this. Then in March where it still looked like the world was coming to an end the market turned and since then has doubled. So, don't let emotions get in your way. If you don't need the money right away, keep it in the market, add a certain amount in a disciplined way each month or week or whatever time period you wish to use. Stick to it and you'll do better than most of those who try to respond to the latest headline about this sector or that sector. If you don't have time to follow it, pick a few index funds and leave it alone.

Deborah Borchardt: It has been a difficult market for the smaller investor because it seems like they have just left the market. I know a lot of the brokerage firms are struggling with that. How are we going to get them back? Is it going to take that big move in the market to bring them back?

Steve Forbes: Sadly, they'll come after the market has zoomed upwards. Again, people should keep in mind the market will fluctuate. Even when Reagan became president the market took a hit until the summer of '82. And then subsequently, the Dow Jones went up 15-fold. So, ride the thing out. This country will recover. For those who fear the worse, remember the old adage, the world can only end once and this is not it.